FTSE-100 falls to 1998 levels!

EdInvestor

missile wrote: »

It is a global market place, but it just seemed a little strange (to me) and I not heard any of the pundits comment on why footsie should fall so much more than all other indices.

As mentioned it is mainly the time lag factor - if the FTSE had been open all night it would probably have closed level along with the Dow. The FTSE is now about 30% owner by foreign investors, primarily big global investment houses, so that tends to link it more losely to US thinking.

One can't help but observe that there has been something of a standoff on the subject on lowering interest rates.The market's "two year old tantrum" on Thursday appears to have been hysterical enough to make the Fed blink first.;)

RayWolfe

EagerLearner wrote: »

Started buying into funds 2 months ago, clearly bought at the wrong time, lost a fair bit so far but have not sold yet as right now I would definately lose that money. However, wondering this morning if it's best to cut my losses and lose £250, or wait to see some recovery and then buy more. I know guessing is a fools game, but as an inexperienced investor I don't want to be so badly burned that I never touch investimg again...

Two months is no time at all. Stock market investing is a long term activity. It's always disappointing when investments fall, but if you are still happy with your choice of shares or funds, you should stick with it. The only exception would be if you are temperamentally unsuited to falls.
This, obviously, is not advice to you, but I am sticking, have bought more this week, have seen this all before and am not deterred.

Aegis

RayWolfe wrote: »

Two months is no time at all. Stock market investing is a long term activity. It's always disappointing when investments fall, but if you are still happy with your choice of shares or funds, you should stick with it. The only exception would be if you are temperamentally unsuited to falls.
This, obviously, is not advice to you, but I am sticking, have bought more this week, have seen this all before and am not deterred.

It is always reassuring to hear from people that have been through it all before and have been perfectly happy in the long run.

Personally I'm a little annoyed at my timing, but I will keep all my investments as they currently are, safe (ish) in the knowledge that in 5 years they'll be way above the level that they are now!

If nothing else, this will teach me not to check the value every day

missile

Hi Ed,

I know there is a lag and there will be good and bad days, I was quoting yesterdays figure as an example. Perhaps I could have explained better - I just feel it is surprising footsie is down a lot more than Dow and none of the pundits seem to have commented on why that should be?

The FTSE 250 lost 426.8 points to 10,462.6. It means the Footsie has plummeted a painful 873.5 points, or 13%, from its seven-year peak of 6732.4 attained on June 15. Wall Street traded at 1299.6, or 9.3%, below its record close of 14,000.41 less than a month ago, before recovering to finish down just 15 points.

http://www.thisismoney.co.uk/investing-and-markets/tips-and-tactics/article.html?in_article_id=423459&in_page_id=23

Even King Canute could not stop the tide and I seem to remember UK government used it's reserves in a futile effort to prop up the pound.

influence

EagerLearner: Read from the post. It seems that you are going for a long term investment. I guess selling at a fall and buying high is a big No-No. Have you heard about dollar-cost averaging (pound-cost averaging)?
http://en.wikipedia.org/wiki/Dollar_cost_averaging

I guess a monthly contribution will do you good. Buy more at a fall and less at a rise. When you average out, you will build up a better share than a lump sum investment. It is also good for small-time investor like us to avoid the volatility of the market and minimise risk. Good thing also is that we don't have to worry too much about our investment while continue committing to our daily routine. *Fingers crossed* unless there is a huge financial disaster that wipe out the markets like in the great recessions.

Fundamentals at the current point still look fine even though the sky is still cloudy. It may rain but it will be sunny someday.

As to why UK shares fall more than US, (correct me if I am wrong since I am also trying to justify my belief). US global investment houses own huge investments all over the world. When there is a crisis back home, the decision makers generally try to cut losses from overseas investments before cutting their shares in the domestic market.

I remember I read somewhere that alot of them have sold their shares from the Asian market despite their strong belief in the economic growth in that region.

Also I think because the Asian & Europe market opens before US. People tend to minimise risk at the first instance. Europe has to wait (most likely) a day before we can adjust to any decision made by the Fed and US.

Does that make sense?

jon3001

EagerLearner wrote: »

Started buying into funds 2 months ago, clearly bought at the wrong time, lost a fair bit so far but have not sold yet as right now I would definately lose that money. However, wondering this morning if it's best to cut my losses and lose £250, or wait to see some recovery and then buy more. I know guessing is a fools game, but as an inexperienced investor I don't want to be so badly burned that I never touch investimg again...

Assuming you're in this for the long run and will be buying investments regularly then I think the current drop is possibly the best start to your investment career! Lower prices = higher longer term returns.

Consider this:

You buy a gold coin for £300. 2 Months later the price of gold drops and your friend buys an identical coin for £250. 10 years later you both sell your coins at the same time. Who had the higher return?

nrsql

EagerLearner wrote: »

Started buying into funds 2 months ago, clearly bought at the wrong time, lost a fair bit so far but have not sold yet as right now I would definately lose that money. However, wondering this morning if it's best to cut my losses and lose £250, or wait to see some recovery and then buy more. I know guessing is a fools game, but as an inexperienced investor I don't want to be so badly burned that I never touch investimg again...

You had a thread about what you should do when you started invested. I have a feeling you didn't understand what I posted then (at least that's what you seemed to imply). Have another read of that with your new experience -
I still think the suggestions are valid.

A number of people here will say there's never a bad time to invest - maybe you now realise there are better and worse times. It's a bit of a tricky argument to say that the worse time is still a good time.

EagerLearner

Thanks everyone for the comments - please understand I do have a reasonable attitude to risk, most of my funds are fairly risky plus I am not expecting in 2 months to understand everything or give up at the first hurdle. However, I have been watching Bloomberg over the weekend and just get the feeling that the worst has not yet hit so wondered if I should move say 75% to cash as quite a few seem to be doing. However, have not yet done that and am waiting and seeing, possibly even buying some more towards the end of this week.

3 months ago the only investment I had was a cash ISA, so hence my nervousness and I know this will be an irritant to those who have been in the game longer than I have, or maybe are just as new to it but perhaps more knowledgeable on the subject.

RayWolfe

The best way to lose money on the stock market is to buy when prices are high and sell when they are low.
Now what is it that you are contemplating? ;-)
I will go against my instinct here and give some advice: Stop watching Bloomberg!

StevieJ

RayWolfe wrote: »

The best way to lose money on the stock market is to buy when prices are high and sell when they are low.
Now what is it that you are contemplating? ;-)
I will go against my instinct here and give some advice: Stop watching Bloomberg!

Yes, I remember back in 2002 Bloomberg TV were producing 'experts' that were sure the Ftse was going to drop to around 1700.